Amcor Plc Q3 FY2025 earnings call

• The transformational combination with Berry Global closed ahead of schedule, positioning Amcor to accelerate earnings growth through synergies. - Safety remains a top priority with a total recordable incident rate (TRIR) of 0.27 and 69% of sites injury-free for over a year. - Business is organized around two segments: Global Flexible led by Fred Stephan and Global Containers and Closures led by Jean-Marc Galvez. - The combined company has a complementary portfolio, enhanced material science and innovation capabilities, and a plan to deliver $650 million in synergies over three years, with $260 million benefiting fiscal 2026 earnings.

Flexible Segment: Volumes for the quarter were up 1% on last year. Modest share gains in healthcare and protein were offset by weaker consumer demand in North America. Net sales were up 1% on a comparable constant currency basis. Adjusted EBIT of $358 million grew 2% on a comparable constant currency basis, with an EBIT margin of 13.7%. Rigid Packaging Segment: Net sales were approximately 3% lower than last year, reflecting a 2% decline in overall volumes and an unfavorable impact from price mix of approximately 1%. Adjusted EBIT of $55 million for the quarter no longer includes contribution from the Bericap Joint Venture, with EBIT unfavorably impacted by lower volumes and price mix headwinds, partly offset by favorable cost performance.

• Fiscal 2025 adjusted EPS guidance narrowed to $0.72 per share to $0.74 per share. - Free cash flow expected to be in the range of $900 million to $1 billion for the year. - The early close of the merger allows for a strong start on synergy delivery, with $260 million of synergies expected in fiscal 2026 to drive approximately 12% EPS growth, independent of macroeconomic conditions.

• Uncertain macroeconomic environment affecting consumer and customer demand. - Volatility in tariff impacts and raw material costs. - Execution risk in achieving synergies, including potential challenges in procurement and operations due to market conditions.

Q: Congrats on the merger close, can you share on progressive deceleration in North American volumes?

A: Peter Konieczny mentions North American consumer demand weakness, particularly in North American Beverage (down high single digits) and North American Flexibles driven by discretionary categories like confectionery, with sticky inflation and tariff uncertainty contributing.

Q: You pointed to 20% synergy-driven EPS growth assumption for fiscal 2026, is organic growth assumed to be positive?

A: Peter Konieczny states they're not guiding for 2026 today but are confident in delivering $260 million in synergies in fiscal 2026, creating a ~12% EPS uplift, independent of macroeconomic conditions.

Q: On procurement synergies, how are discussions with suppliers going?

A: Peter Konieczny says suppliers weren't engaged much before acquisition close, but teams have been working and are confident in delivering procurement synergies, with a combined spend of $13 billion, $10 billion in raw materials.

Q: How has the portfolio pruning timing changed post-merger?

A: Peter Konieczny says portfolio assessment has started, with progress made, but timing of execution is dynamic and disciplined, with no specific timeline provided yet.

Q: On North American beverage business volume decline, what's the outlook?

A: Michael Casamento notes prior year EBIT included Bericap contribution, and softer than expected volume performance in the quarter, with labor build-up for busy season impacting costs, expecting improvement in Q4.